Oil Search raises dividend as LNG starts to flow

RossKelly

SYDNEY-- Oil Search Ltd. said it would dramatically increase the size of dividend payments to shareholders after it completed a sweeping strategic review of its business.

The Australian company has more cash to distribute after its $19 billion liquefied natural gas joint venture in Papua New Guinea with Exxon Mobil Corp. started shipping its first cargoes of the fuel in May.

The new dividend policy is for 35-50% of net profits, excluding one-off items, to be returned to shareholders, starting from the second half of the current calendar year. Oil Search had previously only paid a fraction of its earnings as dividends, most recently offering a first-half payout of 2 U.S. cents per share.

"After dividend payments, we will still have substantial funds available to pursue growth opportunities," Peter Botten, Oil Search's long-serving chief executive, said in a statement.

Mr. Botten said those growth opportunities could include expanding the Papua New Guinea LNG project with Exxon, and building a new LNG project fed by the Elk and Antelope discoveries in the country, which Oil Search owns in a joint venture with Total SA and InterOil Corp.

"Having a range of high potential growth projects within Papua New Guinea mitigates the immediate need to expand internationally," Mr. Botten said.

Analysts had speculated Oil Search could also be close to revealing a succession plan for Mr. Botten, who has been in the top job for two decades.

On Thursday, the company said more of its senior managers will now be moved to Papua New Guinea to develop deeper relationships with key stakeholders there and provide more "management depth" to deal with challenges.

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